Dow logs first six-session drop since mid-2005

Spike in oil prices, rising bond yields overshadow solid jobs report

By

MarkCotton

NEW YORK (MarketWatch) -- U.S. stocks ended lower Friday with the Dow Jones Industrial Average posting its first six-session losing streak since mid-2005, after a surge in long-term interest rates and a spike in oil prices overshadowed a largely positive October jobs report.

The Dow industrials
DJIA, -1.24%
fell 32.50 points to 11,986.04. Of the blue chip barometer's 30 components, 23 contributed to losses. It's the first time the index has fallen six times in a row since June 2005.

The Nasdaq Composite Index
$COMPQ
was down 3.23 points at 2,330.79 while the S&P 500 Index
SPX, -1.54%
dropped 3.04 points to 1,364.30.

On the week, the Dow fell 0.9% and the Nasdaq Composite declined 0.8%. The S&P 500, meanwhile, put in a weekly loss of 0.9%.

In Friday trading, investors had to juggle with jobs data, higher oil prices and a jump in bond yields, but also a raft of earnings reports led by Qualcomm
QCOM, -1.95%
Electronic Arts
ERTS
and Whole Foods Market Inc.
WFMI

"We're pulling back because of the sell-off in the bond market that is sending yields higher," said James Park, managing director at Rodman and Renshaw. "Oil is also picking up some steam here."

For Owen Fitzpatrick, managing director private wealth management at Deutsche Bank, the employment report did alleviate some concerns over a slowing economy.

But "we have the election coming up next week with a lot of focus on what will happen with both the House and the Senate, so I don't think we'll get anything too big in front of that. And in general, it's hard to completely offset some of the weaker economic numbers we've been getting," he said.

Weak manufacturing and productivity reports are two key pieces of data that came up short of expectations earlier in the week.

The latest jobs report offered proof to some that the U.S. labor market is on a firmer footing than previously thought. Although the economy created a smaller-than-expected 92,000 jobs in October, upward revisions to August and September payroll numbers helped mitigate the impact of weak October number.

Investors also cheered the fact that the unemployment rate dropped to 4.4%, the lowest level in more than 5 years. The jobless rate was expected to remain at 4.6%. See full story.

Investors had further good news on the nation's services sector. Activity at nonmanufacturing sectors of the U.S. economy rebounded during October, the Institute for Supply Management reported.

The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. The increase was sharper than forecast. Economists were looking the index to rise to 54.6%. Within the report was good news on inflation. The price index slipped to 51.9% from 56.7% in the previous month. See full story.

On the broader market for equities, decliners had a 17 to 15 advantage over advancers on the New York Stock Exchange, but winners led losers by 17 to 12 on the Nasdaq.

Volume was 1.51 billion on the Big Board and 1.88 billion on the Nasdaq.

Other markets

Treasurys caved in after the jobs report as it all but dashed hopes of a Federal Reserve rate cut in the near future. The benchmark 10-year Treasury note ended down 30/32 at 101-7/32 with a yield
TNX, -1.21%
of 4.72%. See Bond Report.

The dollar strengthened after the employment report reduced the odds of the Federal Reserve cutting U.S. interest rates anytime soon. See Currencies.

The euro was last down 0.5% at $1.2717. Against the Japanese yen, the greenback rallied to a one-week high, up 0.7% at 118. Check foreign exchange rates.

Crude futures ended sharply higher on the session, but fell 2.7% on the week, amid political worries about the Middle East and Nigeria, with the solid jobs report easing fears a slowing economy could lead to a fall-off in demand. Crude for December delivery rose $1.26 to $59.14 a barrel. See full story.

Syria and the Lebanese group Hezbollah rejected U.S. accusations that they are planning to topple the Lebanese government with help from Iran, the BBC reported on its Web site. In Nigeria the U.S. embassy warned Friday that attacks by a militant group on as many as 20 oil facilities may unfold within days.

Gold futures shrugged off strength in the dollar to end higher on the session and post a weekly gain of 5%. The benchmark December contract ended up $1.40 at $629.20 an ounce. See Metals Stocks.

Stocks of note

Qualcomm Inc.
QCOM, -1.95%
tacked on 11 cents at $36.47. The maker of wireless technology products posted a 14% jump in quarterly net income as it sold more of its cell-phone chip technology, but some analysts expressed disappointment over its outlook. See full story.

Shares in Electronic Arts Inc.
ERTS
shot up 12% to $59.24 after the No. 1 publisher of video game software reported results that topped expectations and raised its full-year sales and profit forecast. See full story.

Whole Foods Market Inc.
WFMI
plunged 23% to $46.26 after the supermarket chain warned that its annual growth next year will slow to 6% to 8%, down from 11% this year. See full story.

Oracle Corp.
ORCL, -1.42%
fell 2.7% to $17.78. Late Thursday, the company said it will buy software developer Stellent Inc.
STEL, +5.26%
for $440 million. Stellent shot up 26% to $13.35. See full story.

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